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Flexibility and Adjustment to Information in Sequential Decision Problems : A Systematic Approach : Lecture Notes in Economic and Mathematical Systems - Armin Schmutzler

Flexibility and Adjustment to Information in Sequential Decision Problems : A Systematic Approach

Lecture Notes in Economic and Mathematical Systems

Paperback

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This work, adopting an economic theoretical stance, offers a systematic approach to sequential decision problems. The emphasis of the book is on the interplay between irreversibility, uncertainty and information. In particular, it demonstrates how flexibility considerations can be modelled in a general choice-theoretical framework. Examples drawn from capital and investment theory are included.

1 The Importance of Irreversibility and Learning - Familiar Examples Revisited.- 1.1 Neoclassical Investment Models: A Brief Survey.- 1.1.1 The Standard Neoclassical Investment Theory Model.- 1.1.2 The Investment Model with Adjustment Costs.- 1.1.3 The Irreversibility of Investment.- 1.1.4 Delivery Lags.- 1.2 Flexible Manufacturing Systems.- 1.2.1 Some Basic Facts about Manufacturing.- 1.2.2 The Determinants of the Flexibility of Manufacturing Systems.- 1.2.3 Manufacturing as a Multiperiod Choice Problem.- 1.3 Conclusions.- 2 The Role of Irreversibility and Learning in Sequential Decision Problems - Basic Concepts.- 2.1 The Two-Period Model without Uncertainty.- 2.1.1 The Elements of the Model.- 2.1.2 Economic Examples.- 2.1.3 Some Basic Results.- 2.1.4 Intertemporal Opportunity Costs.- 2.2 The Two-Period Model with Uncertainty.- 2.2.1 The Elements of the Model.- 2.2.2 Special Cases.- 2.2.3 Flexibility and the Value of Information.- 2.2.4 An Example: Waiting to Invest.- 2.3 Switching Costs.- 2.3.1 The Extended Model.- 2.3.2 An Example: Money Demand as Demand for Flexibility.- 2.4 Summary and Outlook.- 3 Determinants of the Optimal Choice in Sequential Decision Problems - The Two-Period Case.- 3.1 The Formulation of the Problem.- 3.1.1 Some Explanatory Remarks.- 3.1.2 On the Comparison of Information Structures.- 3.2 The Influence of the Choice Set.- 3.3 The Impact of the Decision Criterion.- 3.3.1 Comparison of Bayesian Values.- 3.3.2 Conditions for the Equality of Different Strategies.- 3.3.3 Comparison of the Flexibility of Initial Choices.- 3.4 The Impact of the Information Structure.- 3.4.1 A Counterexample.- 3.4.2 Relative Gains from Information for Different Positions.- 3.4.3 The JONES/OSTROY-Theorem.- 3.4.4 Examples and Modifications.- 3.4.5 Interpretation: Does Greater Uncertainty Imply Greater Demand for Flexibility?.- 3.5 The Two-Period Model - Final Thoughts.- 4 A T-Period Model of Intertemporal Choice with Irreversibility and Uncertainty.- 4.1 The General T-Period Model of Choice.- 4.1.1 The Structure of the Choice Set.- 4.1.2 Economic Examples.- 4.1.3 Results.- 4.1.4 Intertemporal Opportunity Costs.- 4.1.5 Uncertainty and Learning.- 4.2 Some Generalities on Intertemporal Planning.- 4.2.1 Maximum Lifetime, Time Horizon and Time Preference.- 4.2.2 Rolling Myopic Plans.- 4.3 Modelling Rolling Myopic Plans.- 4.3.1 The Standard T-Period Control Problem.- 4.3.2 Examples.- 4.3.3 Bellman's Principle.- 4.3.4 (T,S)-Plans.- 4.3.5 A Monotonicity Result.- 4.4 Final Remarks on the T-Period Model.- 5 Consumption and Savings Decisions of Households.- 5.1 Motives for the Demand for Money - Some Familiar Tenets.- 5.2 The Structure of the Model.- 5.3 Money Demand when there are no Transaction Costs.- 5.4 Transaction Costs.- 5.4.1 Holding Money in the Absence of Uncertainty.- 5.4.2 Holding Money to Stay Flexible.- Epilogue.- References.

ISBN: 9783540546450
ISBN-10: 3540546456
Series: Lecture Notes in Economic and Mathematical Systems
Audience: General
Format: Paperback
Language: English
Number Of Pages: 198
Publisher: Springer-Verlag Berlin and Heidelberg Gmbh & Co. Kg
Country of Publication: DE
Dimensions (cm): 24.41 x 16.99  x 1.14
Weight (kg): 0.35